Posts Tagged ‘Short Sale’

HUD-1 is Critical For Short Sales

March 28th, 2011 Comments off

If you’re going to work a short sale or do on a regular basis, lenders require a package deal that includes a rule the purchase agreement, a letter of authorization, a hardship letter, a statement of the financial statements of the seller, a listing contract (maybe), and a complete “preliminary” HUD-1 form.

I used the word here because the original offer preliminary, the HUD-1 numbers are not accurate (but the form needs to be precise) and are normally the responsibility of investors. As the business moves through the approval process and towards a formal closing, a title company normally produce a final HUD-1, with exact numbers.

A sample form can be found on the HUD website.

One of the most important skills for the foreclosure investor must be able to successfully complete the HUD-1 settlement statement. In a short sale (and “normal” real estate transactions), this form dictates who gets the amount of money. Period.

The HUD-1 form is under the control of the Real Estate Settlement Procedures Act (RESPA). This act states that the form must be distributed to all parties one day before closing. However, some closures are very short time constraints and the final HUD-1 may be released shortly before closing time.

The two-page form is divided into sections, with details on the right Seller and Buyer details on the left. These sections are further broken down by line number. We’ll focus on the seller’s form, because this is the side that lenders consider a short sale.

The top of the module is simple with the name of the seller, the buyer’s name, address of property, etc.

Line 401 is the gross offering price.

The lines 504 and 505 represent the net offers the first and 2nd lien holders. These two lines are the most important in the provision of short sale.

Lines 510-519 are used to pro-ration of taxes for the current year, along with note past due taxes or liens Hoa.

Lines 700-704 are to note the use of real estate commission fees.

Lines 1100-1113 are used for expense account title, closing expenses, etc.

Lines 1300-1305 are for the additional settlement fees.

Note that the lenders are looking for line 603 to zero, as this is the case of understanding seller.

Since most title companies will not make many prelim HUD-1 on deals that do not close, it is imperative that the investor foreclosure lean as carefully fill the form HUD-1. It ‘s the greatest instrument used in the process of negotiation.

The key is to understand that we must be ever more diligent in calculating the bid. Note, the formulas used to calculate expected long-term deals in real estate are not related to fix and flip formulas, and these deals are usually disastrous to unsuspecting investors.

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The Real Estate Short Sale, What You Need

March 15th, 2011 Comments off

Article by James Boyer

Do you owe more on your home than it is likely to sell for? Are you having big trouble making your mortgage payments and in danger of being foreclosed on? Want to sell your home and just move on with your life? Do you want your real estate agent to do the negotiations with your mortgage company for you? This may or may not be possible depending you your mortgage company, but some will allow your REALTOR to negotiate with them on your behalf. Note this is not a comprehensive list as every mortgage company is different in what they will want to see, but this list should give you a very good idea of what is going to be needed in order to have any chance of having your short sale approved by your home mortgage company.

A non comprehensive list of things you will need to provide to your REALTOR if he or she is to negotiate a short sale for you.

1. All your mortgage information, account #’s, balances, contact numbers2. A copy of your Hud1 from the purchase of the home3. A copy of your dead for the home4. Your United States Social Security number, if you have one5. Your work visa information6. Copies of your green card information7. Copies of your past 5 years tax returns8. Copies of your past 5 years bank statements9. Copies of your past 6 months pay stubs10. Your past employer information for 3 years (addresses, job titles, compensation levels)11. Your current employer information (address, job title, compensation level)12. An authorization letter specifically authorizing me to negotiate with the mortgage company on your behalf.13. You will need to put together a hardship letter explaining to the bank why you cannot afford to continue to pay the mortgage on the home, and / or cannot afford sell your home and pay the difference between sale proceeds and the amount of money needed to satisfy all debts against the house.

Note banks do not like short sales. If they believe that you have the capability of fulfilling the mortgage through payments or payoff, they will likely not accept a short sale unless you have showed that you do have the ability to make full mortgage payments and are willing to proceed to foreclosure and negatively impact your credit rating including the likely closure of all credit cards.

In short, home mortgage companies don’t make it easy for you to lose money for them.

About the Author

Written by James Boyer your Chatham NJ REALTOR.  When it comes to the Chatham NJ real estate market James Boyer is the REALTOR giving you the best real estate search tools, expert advice, and grade A service to ensure that you get the best possible results in your home search and purchase, be that in Chatham New Jerse

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Hud-1 Settlement statement for Short Sales and Closings part 120

March 15th, 2011 Comments off

Hud-1 Settlement statement for Short Sales and Closings part 120 – How to create unlimited Hud-1 s from your computer, for all your real estate or short sale closings. Also called: Hud-1 statement form, Hud 1 settlement statement, Hud1

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